From the rapid fall in oil prices to the conflicts that have threatened key energy sources and transit routes in the Middle East and North Africa, the global energy landscape has shifted dramatically over the past year. The change of a single number – the price of a barrel of crude oil – can carry profound implications for government policies and company decisions around the world, from efforts at subsidy reform to shale oil extraction. Understanding the interplay between key geopolitical events and energy markets remains crucial.

Has Asian consumers’ growing dependence on Middle Eastern energy supplies prompted greater interest in providing for the region’s security? How will new sources and new transit routes reshape the global LNG and natural gas landscape? What has been the impact of falling energy prices on unconventional production and investment in renewable energy resources?

At the fourth annual Brookings Doha Energy Forum, experts and policymakers from around the globe met to discuss the key global energy trends. In broad plenary sessions and focused roundtable discussions, industry leaders from the Middle East, Europe, Asia, and the United States wrestled with these and other questions. The findings of these many conversations are reflected in this report, jointly prepared by the Brookings Doha Center and the Energy Security and Climate Initiative.

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• English PDF
• Arabic PDF

Over the past year, much attention has been given to the growing production of shale oil and the challenge that these unconventional sources of energy pose to traditional producers in the Gulf. As the world’s leading exporter of liquefied natural gas (LNG), Qatar faces related concerns – mounting competition from new LNG exporters and more competitive pricing in key Asian gas markets. How will this global gas boom unfold? How can Doha develop a robust response to growing volatility in gas pricing and demand?

In a new Brookings Doha Center Analysis Paper, Naser al-Tamimi examines Qatar’s position on the global gas stage and assesses the prospects of new competitors. He argues that new LNG production and exports – from Australia, the United States, and other countries – present a challenge to Qatar’s dominant status in global gas markets, particularly in the Asia-Pacific region. At the same time, diversification and slowing growth in this region’s major economies, such as China, South Korea, and Japan, may reduce LNG demand across the board.

Read "Navigating uncertainty: Qatar’s response to the global gas boom"

Ultimately, Tamimi argues that Qatar’s pricing mechanisms and export revenues will come under significant pressure as a result of these developments, posing a potential challenge to Qatari finances. He contends that an effective response from Qatari officials must emphasize greater exports to the Middle East/North Africa region, greater contract flexibility to attract new buyers, and cooperation with other GCC members to improve Gulf bargaining power in key regional markets.

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• English PDF
• Arabic PDF

I appreciate this opportunity to share my thoughts about ways that retirement plans can provide clear, concise and objective information to participants that enables them to make appropriate decisions.  However, I would go beyond that to provide information that also motivates employees towards actions that will prove to be in their long-term best interest.

The shift from traditional pensions to the current defined contribution system places most of the responsibility for making decisions on the participant.  Automatic enrollment and similar features assist them by combining several formerly potentially complex decisions about whether to participate, how much to save and what investment vehicle to use into one question that the employee can effectively answer by doing nothing.  While the result may not be optimal in all situations, it is certainly better for the saver than not saving at all or waiting until he or she has all of the answers – a day that for many may never come.  For these reasons, automatic enrollment and escalation are extremely popular with both those who accept the automatic choices and those who opt out.

Unfortunately, at this time, automatic mechanisms are not available for every decision that an employee might need to make between starting to save and retirement.  Over time, additional mechanisms that are in development will further simplify these plans, but they are not available yet.  Today’s automatic mechanisms also do not necessarily affect the attitudes that participants may have about their saving balances and how they might be used.  To assist in these areas, effective participant communication is needed.

In order to be effective, communications and notices to employees must have a consistent message that regularly appears throughout an employee’s career.  No single notice, no matter how effectively worded or how timely it is provided, will be as effective as a regular series of messages.  And in order to be effective, notices and statements need to be geared to the needs of the participant rather than to provide legal cover to the plan sponsor for any unanticipated situation.  This requires that they be short, clear, simple and to the point. 

This need for regular communication as opposed to a single notice or series of notices is especially true for withdrawal options.  Whether the participant is leaving the employer or retiring, they need to have key information well in advance of when it is needed.  Otherwise, the saver may be influenced by others who are not acting in their best interests or make a decision based on advice from well-meaning, but poorly informed family friends.

An effective participant education plan for lifetime plan participation and effective withdrawal options should have at least three separate parts, which are detailed below.  These include effective information contained in the quarterly statement; notices at the time an employee leaves the plan due to a job change, and a pre-retirement education campaign. 

While all three must have consistent messages, they should also be tailored for specific circumstances.  What follows is a general discussion, as effective model forms require field-testing in focus groups and similar settings.  Unfortunately, forms developed by financial professionals with a deep understanding of key issues often gloss over important background information or have technical wording that confuses non-professionals. 

Another problem with many individual statements and notices is that they contain too much information.  The professionals who developed them recognize the limitations of projection models and seek to compensate by providing a range of results using differing assumptions.  Unfortunately, this either further confuses the reader or appears as a dense block of type that is usually completely skipped.  It is far better to provide a simple illustration with clear warnings of its limitations than to flood the employee with complex information that will be ignored.

The most important participant education tool is the quarterly statement they receive.  Properly structured, these statements can set the stage for more specific notices before an employee leaves the employer due to either a new job or retirement.  Today’s statements are often too long and inadvertently cause the employee to focus on account balances rather than seeing the retirement plan as a source of future income.  In many cases, they also fail to note that income from the plan should be added to Social Security for a better estimate of total retirement income.  Two major innovations would be to add both income illustrations and to combine 401k statements with the existing Social Security statement.

Income illustrations: Most of today’s quarterly statements focus almost exclusively on the amount that an individual has saved and how much he or she has gained or lost in the previous quarter.  This focus damages the ability of a participant to see the plan as anything other than a savings account.  Faced with a lump sum of retirement savings that may be a much higher amount than an individual has ever had and little or no practical experience about how to translate that amount into an income stream, it would be very easy for a worker to assume that he or she is much better prepared for retirement than is actually the case.  An income illustration would help savers to make earlier and better decisions about how much they may need to save and how best to manage their retirement assets.

The illustrations should also encourage participation both by including both current and projected balances and by showing the additional income that could be expected if the saver slightly increased his or her contributions. 

Including income illustrations for both current and projected retirement savings balances would have a greater incentive effect than just including current balances.  For younger employees, the very small amount of income that would be produced from their current retirement savings balances may discourage them from further savings and thus have the opposite effect of what is in their long-term best interest and the objective of this disclosure.  Including an income illustration for projected balances that assumes continued participation provides a clearer picture of the extent to which the amount that the individual is saving will meet his or her retirement income needs.

Studies show that an illustration of the additional income that can be derived from a higher level of saving is likely to stimulate the participant to increase his or her savings rate.  Plan sponsors should be encouraged to also include balance projections and income illustrations that show how much retirement income an individual would have if they modestly increased the proportion of their income that they contributed to their retirement savings plan.  For instance, in addition to the income illustrations based on their current balances and projected balances assuming their current savings rate, there might be an illustration based on saving an additional one percent of income and another three percent of income. 

Combining Social Security Statements with Quarterly Statements: As a further way of moving the focus of quarterly statements away from lump sums and investment returns and towards retirement income, an accurate estimate of projected Social Security benefits could be added to at least one annual quarterly statement containing an income illustration.  Some 401(k) providers already simulate Social Security benefits and provide this information to account owners, but these providers lack the income and work history data to make a truly accurate projection.  Collaboration between SSA and 401(k) plan administrators could result in adding information from the once annual Social Security statement to at least one 401(k) quarterly report each year.

Two sets of concerns about using Social Security information would need to be addressed: concerns about privacy and concerns about accuracy. Previous discussions of similar proposals failed because of privacy concerns, as many individuals do not want employers to have access to their Social Security information. Account holders’ privacy is a concern for 401(k) providers too, and providers go to great lengths to protect the confidential data in the quarterly statements. To assuage concerns about the data from SSA, Social Security data could be provided directly to 401(k) administrators rather than employers and included on an annual 401(k) statement only if the administrators meet certain SSA-developed privacy standards. Individuals could have control over this decision through the ability to opt in to the service or to opt out, if the service were automatic. This should preserve individual choice and satisfy persons especially concerned about privacy.

To ensure accuracy and consistency, income illustrations of balances in the 401(k) and SSA projections would need to be produced using compatible methodologies that allow the projected monthly income estimates to be combined for a complete picture of estimated retirement income. This is not a terribly difficult problem.  This reform will give people important information about how to plan their futures. They desperately need this information, and providing it should be fairly simple and cost-effective.

Using an Enhanced Statement as a Base for Additional Guidance and Education

An enhanced quarterly statement with a consistent message that retirement plan participation is intended as retirement income will set the stage for more effective education when the participant leaves the employer.  The current statement format that focuses on aggregate savings amount and the performance of investments sends the message that the balances could be used for other purposes.  This encourage leakage when employees change jobs and may leave the impression that the savers has sufficient resources to use part or all of that money for other purposes.

While the information on investment returns is important and should remain on the statement, it should be de-emphasized, with the focus moving to retirement income that it can provide.  As an aside, let me be clear that I do not favor eliminating the ability to withdraw savings before retirement in the event of an emergency.  For one thing, doing so would reduce participation, and could hurt vulnerable populations that have no other major source of savings.  However, the purpose of the quarterly statement should be to inform savers of their future retirement income, and its orientation should be towards that goal.

Several studies show that the biggest source of leakage occurs when employees change jobs.  Part of the reason for this loss of savings may be the way that employers handle the discussion about retirement assets upon separation.  A discussion that is centered on the open question of what should we do with your money may encourage savers to simply ask for their money as a lump sum.  This is especially true if the participant is not informed of the tax consequences of an early withdrawal and the potential effect on future retirement income.

On the other hand, if the participant has received a consistent message that the account is for retirement income, and is informed of the potential consequences of withdrawing the money, they would be less likely to take the funds and more likely to leave the money in the current employer’s plan or to roll it into a plan offered by the new employer or an IRA.  Of course, part of this decision would be determined by whether the current employer is willing to allow the money to remain in their plan or if they would prefer it to be moved to another location.

As a side note, the process of combining retirement savings from one employer to another would be much easier if there is a simple mechanism that can be used to make such transfers.  As I can testify from personal experience, it can be extremely complex to roll retirement money from one employers’ plan to another’s even for those of us who work in this field.  Plan administrators from both the sending and receiving plans make this process overly difficult in part because one party needs to know if it is a legitimate transfer as opposed to a withdrawal, and the other needs to know that the money it is receiving has the proper tax status.  While it is beyond the scope of today’s hearing, it is definitely worth the effort for regulators and if necessary legislators to simplify the process and encourage automatic rollovers between employers.

Contents of Model Notices for Participants Changing Employers:

Given this background, a disclosure notice provided to employees who are moving to another employer should include specific information about several topics.  However, a one-shot notice will be far less effective than an educational campaign that includes information about how poor decisions when changing jobs can adversely affect retirement security.  This information should not be limited to when an employee departs; it should also be included in regular communications.

When an employee moves to another employer, he or she needs to know:

• Ability to retain fund in the account or roll them into another account: The employee should be informed that moving the money to another retirement account, ideally that of the new employer, is the best option.  He or she should also be informed if the current plan is willing to continue to hold the money.  Information about how to effect the rollover and/or a third party willing to assist with the transaction can be provided on a separate sheet.
• Tax consequences of withdrawing the money: An early withdrawal from a traditional account is usually subject to both income taxes and a penalty.  The employer should be informed of both the combined marginal rate and the total amount of retirement money that will be lost by taking the money out of the system.
• Effect on retirement security of withdrawing the money: Using an income projection, the participant should be shown that a withdrawal will potentially reduce their income at retirement by a certain dollar amount.  They should also be shown how long it will take to replace that amount of saving.
• Potential costs of moving to the wrong IRA provider: Moving from a relatively low administrative cost employer plan into an IRA with higher fees could have a major effect on the eventual retirement income.  Participants should be informed of this and offered a separate sheet discussing how to tell if an IRA provider has appropriate fee levels.  This can ge general information rather than tailored to the specific employee.
• Continuing to save at the same rate in the new employer’s plan: Finally, the employee should be encourage to start saving in the new employer’s plan at least at the same level that they have been contributing to the plan of the current employer.

These disclosures do not need to be extremely detailed or presented in legal terms.  If the participant cannot immediately understand what is being said, the information is essentially useless.  To relieve employers’ worry about legal liability, a model form that protects them from liability would be worth creating.  However, this information is important, and could have a major effect on whether the money leaks out of the retirement system or remains in it.

Finally, the term “model form” does not need to mean a single form.  In cases where a great deal of information needs to be available, one form could summarize the situation, while others provide more detailed information about certain subjects.  However, this does not mean that these other forms should be written in long, legalistic language.  Both the summary form and others should be in clear, concise language with appropriate graphics.

Decisions about how to translate retirement savings into an appropriate income strategy can be among the most complex that an individual faces.  Even those of us who work in the field can find the decision about whether to use an annuity or longevity insurance to supplement other strategies daunting.  This confusion is only made worse by the focus of today’s quarterly statements on lump sums and investment performance.

Ideally, retirement income disclosures would be combined with an automatic enrollment-like withdrawal strategy that the employee could adopt simply by not opting out.  Unfortunately, while this is the subject of much research by both many groups and companies, it is not currently available.

To be most effective, education on retirement income strategies should not be delayed until the participant reaches a specific age.  Rather, it should begin with the design of the quarterly statement and continue with regular discussions of how to create a retirement strategy throughout an employee’s career.  Even if the participant does not pay much attention for many years, the information will form a backdrop that will be recalled when he or she starts to think about retirement.

Because retirement income strategies are complex, the notices should include both a short summary sheet and individual longer notices on specific topics.  Covered information should include:

• An overview sheet with general information: A general discussion of how to think of retirement income as well as the general elements that can be combined to provide an appropriate amount of secure income.
• The role of Social Security: Social Security pays an inflation-indexed annuity that serves as the basis for retirement income strategies.  Employees should be given information about how much they can expect, how to apply for benefits, and the value of delaying their benefits. 
• What income options are in the employer plan: If the employer plan offers any income options, they should be disclosed and explained.  If not, the employee should be informed that they would need to go outside the plan and given advice on how to select a provider (see below).  This would include the potential problems of turning the money over to a broker to manage.
• How long an individual is likely to live: Most people have no idea how long they could live in retirement.  A brief discussion of the average longevity for their specific gender and birth cohort along with a notation that average longevity means that half of them will live longer would be helpful.
• Longevity insurance and how to use it:  Longevity insurance can be a valuable part of a retirement income plan.  How to think about it and choose a policy would be valuable.
• Using immediate annuities and how to buy one: This is a separate discussion from longevity insurance.  While few of today’s retirees may be interested in immediate annuities, information on how to select one should be included.
• Positives and negatives of a phased-withdrawal system: Most retirees will use a phased-withdrawal system for at least some of their retirement income.  This would briefly explain the value of one, the drawbacks of withdrawing a set percentage of savings each year, and how to choose a plan.
• How to choose a financial advisor: Hopefully, may employees will seek the advice of a professional.  If the employer does not provide access to an adviser, tips on how to select one and what questions to ask would be useful.

Again, this is complex information, and employers should also be encouraged to sponsor seminars and counseling sessions for retiring employees.  As mentioned repeatedly, the value of this information and the employee’s receptivity to it would be much greater if it has been part of a regular communications strategy that is simple and accessible.

The contents of individual notices are important, but they will be much more effective if they are placed in the context of a communications strategy with a consistent message.  Making the focus of participant education the fact that the purpose of saving in the plan is to produce retirement income rather than lump sums will help participants understand the importance of rolling over their money when changing employers and of developing a sound income strategy when they retire.

In recent weeks, the Obama Administration has taken the two most important steps in nearly a decade to increase access to retirement savings for more than 55 million Americans who currently do not participate in a retirement saving plan.

The Treasury Department's myRA program, launched this month, will help new savers and the self-employed start accounts without risk or fees. And earlier this week, the Department of Labor clarified rules that will make it easier for states to create retirement savings plans for small business employees.

myRA

The new myRAs provide another way for new savers to build small nest eggs. They will also help consultants, contract employees, and part-time workers save for retirement or for emergencies. 

For employees, myRAs are payroll deduction savings accounts designed to meet the needs of new savers and lower income workers.  They have no fees, cost nothing to open, and allow savers to regularly contribute any amount.  Savings are invested in US Treasury bonds, so savers can’t lose principal, an important feature for low-income workers who might otherwise abandon plans if they face early losses.  Those who are not formal employees and thus lack access to an employer-sponsored plan can participate in myRA through direct withdrawals from a checking or other bank account. 

As the growing “gig economy” creates more independent workers, the myRA will be a valuable entry to the private retirement system.  These workers might otherwise retire on little more than Social Security. All workers can build myRA balances by redirecting income tax refunds into their accounts. Because a myRA is a Roth IRA (that is, contributions are made from after-tax income), savers can withdraw their own contributions at any time without penalties or tax liability.  

When a myRA reaches $15,000, it must be rolled into another account, and Treasury may make it possible for workers to transfer these savings into funds managed by one of several pre-approved private providers.  MyRAs won’t replace either state-sponsored plans or employer-related pension or retirement savings plans.  However, they will make it possible for new and lower-income savers as well as the self-employed to build financial security without risk or fees.  

State-Sponsored Retirement Savings Plans

The DOL announcement gave the green light to several state models, including Automatic IRAs, marketplace models, and Multiple Employer Plans.  About two dozen states are considering these plans and, so far, Illinois and Oregon have passed “Secure Choice” plans based on the Automatic IRA, while Washington State has passed a marketplace plan.

DOL’s proposed Automatic IRA rules (open for a 60 day comment period) would let states administer automatic enrollment payroll deduction IRAs provided that the plans meet certain conditions for selecting or managing the investments and consumer protections.  States would also have to require businesses to offer such a plan if they don’t already offer their employees a pension or other retirement savings plan. Companies that are not required to offer an Automatic IRA or other plan, but decide to join the state plan voluntarily could still be subject to ERISA. The Retirement Security Project at the Brookings Institution first designed the Automatic IRA, which was proposed by the Administration before being adopted by some states.

In a separate interpretation, DOL allowed states to offer marketplace plans without being subject to the Employee Retirement Income Security Act (ERISA).  These plans are essentially websites where small businesses may select pre-screened plans that meet certain fee or other criteria.  Under the DOL guidance, these marketplaces may include ERISA plans, but states cannot require employers to offer them.   However, if states sponsor a marketplace model, they could also require employers without other plans to offer Automatic IRAs.

Finally, DOL’s rules let states administer Multiple Employer Plans (MEPs), where individual employers all use the same ERISA-covered model plan.  MEPs are usually simplified 401(k)-type plans. Because the state would be acting on behalf of participating employers, it could assume some functions that would otherwise be the responsibility of the employer. These include handling ERISA compliance, selecting investments, and managing the plan.

The Retirement Security Project has issued a paper and held an event discussing ways states could create small business retirement savings plans. The paper is available here and the event is available here.

Together, the two initiatives—the new MyRA and the state-sponsored plans-- could greatly increase the number of American workers who’ll be able to supplement their Social Security benefits with personal savings.

Ron Haskins and Isabel Sawhill were just awarded the 2016 Daniel Patrick Moynihan Prize by the American Academy of Political and Social Science. The honor is presented to “a leading policymaker, social scientist, or public intellectual whose career demonstrates the value of using social science evidence to advance the public good.” In this case, however, for the first time the award was awarded jointly.

Here at Brookings, Belle and Ron have forged a powerful and unique intellectual partnership, founding and elevating the Center on Children and Families and producing world-class work on families, poverty, opportunity, evidence, parenting, work and education, and much more besides.

The Association highlighted Belle and Ron’s bipartisanship. This was appropriate, given that the two have different political backgrounds, and work with people across the political spectrum. The skills and attributes they display in order to work in this way are:

1. Deep respect for the views of others regardless of their politics.
2. Reverence for the evidence and for the facts.
3. A willingness to adapt their views to the facts, rather than (as so often in this town), the other way around. This has been true even when it has made their life more difficult with people on “their” side of the political spectrum.
4. A desire to work hard to bring ideas to bear on public policy. The point is to do good work, but also to have real impact.
5. An insatiable intellectual curiosity to find out more, push new boundaries, and to keep learning. (Both of them have new books out, of course.)

These attributes, when you think about it, are those every decent scholar should aspire to. Belle and Ron have shown us that the skills for bipartisanship turn out to be essentially the same skills as those required for good scholarship.

In his remarks at the Prize lecture, Ron focused on the rise, importance, and prospects for evidence-based policy. Ron has tackled this subject at book length in Show Me the Evidence. Here is part of what Ron had to say:

“Perhaps the most important social function of social science is to find and test programs that will reduce the nation’s social problems. The exploding movement of evidence-based policy and the many roots the movement is now planting, offer the best chance of fulfilling this vital mission of social science, of achieving, in other words, exactly the outcomes Moynihan had hoped for. Today, evidence-based policy rests on the mighty oak of program evaluation in general and the random assignment study in particular.”

Ron highlighted the growth of Pay for Success programs, the Obama administration’s emphasis on evidence-based initiatives, and the creation of the Ryan/Murray Commission on Evidence-Based Policy.

Ron argued that it was right to be skeptical about the likely impact of any particular intervention. But this is not to say that policy doesn’t work—just that some policies work, others don’t, and it good to know the difference. In his slides, Ron lists some programs that have been shown to have demonstrable, sustainable impact—what he described as “his entry in the evidence-based policy sweepstakes.”

But there are plenty of challenges ahead, including the need to improve our understanding of implementation; and the following critical question: “When a program fails, what’s next?” Ron argued that the answer should not be to simply pull the funding, but to work on improving performance.

Belle highlighted the work captured in her latest book, Generation Unbound, on how to reduce the damaging rise of unintended pregnancies and births in the U.S. Over 40 percent of children are born outside of marriage, and 60 percent of births to single women under age 30 are unplanned. In the spirit of being faithful to the facts, and focused on what works, Belle showed the costs of unintended pregnancies for poverty, family stability, and opportunity. Child poverty rates have increased, Belle estimates, by about 25 percent since 1970 because of changes in family structure.

So what are the solutions? In the spirit of following the evidence, Belle argued that the goal must be to help people plan for rather than drift into pregnancy, by broadening access to and use of long-acting reversible contraception. The best example is the intrauterine device, or IUD. The risks of pregnancy for women using this method of contraception are very much lower than for condoms or the pill: 

A fact-based analysis of a problem, followed by an evidence-based approach to solutions: Belle’s work on contraception (sometimes alongside Ron) is a perfect example of bipartisanship, impact-oriented scholarship and a commitment to evidence.

Downloads

• Download Isabel Sawhill's presentation
• Download Ron Haskins's presentation

The Horatio Alger ideal of upward mobility has a strong grip on the American imagination (Reeves 2014). But recent years have seen growing concern about the distance between the rhetoric of opportunity and the reality of intergenerational mobility trends and patterns.

The related issues of equal opportunity, intergenerational mobility, and inequality have all risen up the agenda, for both scholars and policymakers. A growing literature suggests that the United States has fairly low rates of relative income mobility, by comparison to other countries, but also wide variation within the country. President Barack Obama has described the lack of upward mobility, along with income inequality, as “the defining challenge of our time.” Speaker Paul Ryan believes that “the engines of upward mobility have stalled.”

But political debates about equality of opportunity and social and economic mobility often provide as much heat as light. Vitally important questions of definition and motivation are often left unanswered. To what extent can “equality of opportunity” be read across from patterns of intergenerational mobility, which measure only outcomes? Is the main concern with absolute mobility (how people fare compared to their parents)—or with relative mobility (how people fare with regard to their peers)? Should the metric for mobility be earnings, income, education, well-being, or some other yardstick? Is the primary concern with upward mobility from the bottom, or with mobility across the spectrum?

In this paper, we discuss the normative and definitional questions that guide the selection of measures intended to capture “equality of opportunity”; briefly summarize the state of knowledge on intergenerational mobility in the United States; describe a new microsimulation model designed to examine the process of mobility—the Social Genome Model (SGM); and how it can be used to frame and measure the process, as well as some preliminary estimates of the simulated impact of policy interventions across different life stages on rates of mobility.

The three steps being taken in mobility research can be described as the what, the why, and the how. First, it is important to establish what the existing patterns and trends in mobility are. Second, to understand why they exist—in other words, to uncover and describe the “transmission mechanisms” between the outcomes of one generation and the next. Third, to consider how to weaken those mechanisms—or, put differently, how to break the cycles of advantage and disadvantage.

Download "Modeling Equal Opportunity" »

Downloads

• Download "Modeling Equal Opportunity"

Britain’s Conservative Party just tore itself apart over the EU referendum; David Cameron was forced to resign as prime minister. Yet the party in meltdown is Labour. Polling out this past weekend shows Labour drawing 31%, vs. 37% for Conservatives, if a general election were held tomorrow.

The Conservative Party, showing once again its extraordinary capacity for self-preservation, is closing ranks behind new Prime Minister Theresa May. Still, how can the Tories be riding so high after such a political omnishambles? One doesn’t have to look far for an answer: the hard-left Labour leader, Jeremy Corbyn.

Asked who is or would be the best prime minister, just 16% of British voters give Mr. Corbyn the thumbs-up, compared with 52% for Ms. May. Fewer than half of Labour supporters (48%) think Mr. Corbyn would be the best PM. In her first outing in the House of Commons, Ms. May easily trounced Mr. Corbyn. (Her performance was described by the left-leaning Guardian newspaper as a “brutally brilliant” debut.) No wonder most of his parliamentary colleagues have abandoned him, forcing a leadership contest.

Again, the Conservative Party has just presided over an amateurish, disastrous session of British political history. That Tories still dominate is less about their strength than their political opponents’ weakness.

So: What will happen? I’ve just been in London, and conversations with political insiders suggest that this is the most likely scenario to play out:

First, Jeremy Corbyn, having attracted many left-wingers onto party rolls, fends off challenger Owen Smith to retain the leadership of the Labour Party.

Next, the majority of Labour MPs set themselves up as a separate parliamentary group.

As the second-largest group in parliament, these MPs would become the official opposition. They could call themselves anything–say, New Labour Party. (Read this excellent summary of the constitutional implications by Meg Russell of the University College London). This means money and status. If the anti-Corbyn MPs can’t get a new leader, they’ll get a new party.

In the meantime, a few remaining anti-Corbyn MPs stay behind and try to recapture their party. The key here, for those interested in the details, is to take control of Unite, the U.K.’s largest trade union. (Unite’s leader, Len McCluskey, is a strong supporter of Mr. Corbyn and has rallied the union’s members behind him, but his term ends soon.)

If the Labour Party, reduced to a parliamentary rump, remains in Mr. Corbyn’s hands, the next general election would be the moment when the split becomes formal. The New Labour Party would try to attract Liberal Democrat and Green supporters, as well as pro-European conservatives.

Theresa May is likely to wait until the next scheduled general election, in 2020, to face voters. But if Labour were to split, she might decide to call a snap general election to take advantage of opponents’ disarray. Either way, it seems likely the Tories would win.

Center-left parties across the globe seem to be struggling to connect with the anxieties of ordinary voters, leaving them at the mercy of populist appeals. Between populist surges and volatile electorates, we are seeing destabilizing forces at work in politics. Strong political parties act as stabilizers in stormy waters. Whatever one’s individual politics, the fate of the Labour Party in Britain, and perhaps the Republican Party in the U.S., should concern us all.

Editor's note: This piece originally appeared in The Wall Street Journal. 

Event Information

Japan’s presence in the Arctic is not new, but it has been limited mostly to scientific research. Japan has stepped up its engagement after it gained observer status to the Arctic Council and appointed its first Arctic ambassador in 2013. However, Japan has yet to flesh out a full-blown Arctic strategy that identifies the range of its national interests in the polar region and actionable strategies to achieve them. The Arctic offers Japan an opportunity to expand cooperation with the United States in an uncharted area, poses hard questions on how to interact with Russia in the post-Ukraine era, and creates the interesting proposition of whether China and Japan can cooperate in articulating the views of non-Arctic states.

On October 19, the Center for East Asia Policy Studies at Brookings hosted a panel of distinguished experts for a discussion on what components should be included in Japan’s Arctic strategy, ranging from resource development, environmental preservation, and scientific research, to securing access to expanding shipping lanes and managing a complex diplomatic chessboard. 

Join the conversation on Twitter using #JapanArctic

Video

• Charting Japan's Arctic strategy

Event Materials

• taisaku ikeshima presentation

Event Information

Unprecedented armed conflicts and natural disasters are now driving a global displacement crisis. According to the United Nations High Commission for Refugees, more than 60 million people are displaced worldwide, and half of them are children. These displaced children are hindered from developing cognitive and social-emotional skills—such as perseverance, emotional regulation, and conflict resolution—which are essential for school readiness and serve as the foundation for a more peaceful and stable future. However, through the development and testing of innovative educational strategies, we can build effective practices for improving young children’s learning and developmental outcomes in crisis contexts.

On June 8, the Center for Universal Education at Brookings and Sesame Workshop co-hosted a panel discussion to explore innovative strategies to meet the needs of young children in humanitarian crises. 

Audio

• Supporting early childhood development in humanitarian crises

Transcript

• Transcript (.pdf)

Event Materials

• 20160608_early_childhood_transcript

“This is about governments using data for performance rather than compliance” was a resounding message coming out of the U.S. Department of Education’s conference on June 10 on the use of Pay for Success contracts in education. These contracts, known globally as social impact bonds, continue to be at the forefront of global conversations about results-based financing mechanisms, and have garnered significant momentum this week with passage of the Social Impact Partnerships for Pay for Results Act in the U.S. While limitations certainly exist, their potential to revolutionize the way we fund social projects is tremendous.

A social impact bond (SIB) is a set of contracts where a government agency agrees to pay for service outputs or outcomes, rather than funding defined service inputs, and an investor provides upfront risk capital to the service provider. The investor is potentially repaid principal and interest contingent on the achievement of the predetermined outputs or outcomes.

In our research on impact bonds at the Center for Universal Education, we have analyzed the use of SIBs for education in the U.S., other high-income countries, and low- and middle-income countries. Practitioners in each of these contexts are having far more similar conversations than they may realize—all are united in their emphasis on using SIBs to build data systems for performance. There is tremendous potential for lessons learned across these experiences and across the broader discussions of results-based financing mechanisms for education globally.

Current SIBs for education globally

There are currently five SIBs for education worldwide: two in the U.S. for preschool education, one in Portugal for computer science classes in primary school, and one each in Canada and Israel for higher education. In addition, a number of countries have used the SIB model to finance interventions to promote both education and employment outcomes for teens—there are 21 such SIBs in the U.K., three in the Netherlands, and one in Germany. There is also a Development Impact Bond (DIB), where a donor rather than government agency serves as the outcome funder, for girls’ education in India. The Center for Universal Education will host a webinar to present the enrollment and learning outcomes of the first year of the DIB on July 5 (register to join here).

U.S. activities to facilitate the use of SIBs for education

At the June 10 conference at the Department of Education, the secretary of education and the deputy assistant to the president for education said that they saw the greatest potential contribution of SIBs in helping to scale what works to promote education outcomes and in broadening the array of partners involved in improving the education system. Others pointed out the value of the mechanism to coordinate services based on the needs of each student, rather than a multitude of separately funded services engaging the student individually. In addition to using data to coordinate services for an individual, participants emphasized that SIBs can facilitate a shift away from using data to measure compliance, to using data to provide performance feedback loops.

The interest in data for performance rather than compliance is part of a larger shift across the U.S. education sector, represented by the replacement of the strict compliance standards in the No Child Left Behind Act of 2002 with the new federal education funding law, the Every Student Succeeds Act, signed into law in December of 2015. The law allows for federal outcome funding for SIBs in education for the first time, specifically for student support and academic enrichment programs. The recently passed Social Impact Partnerships for Pay for Results Act also allows for outcome funding for education outcomes. The Department of Education conference explored potential applications of SIBs across the education sector, including for early home visiting programs, programs to encourage completion of higher education programs, and career and technical education. The conference also analyzed the potential to use SIBs for programs that support specific disadvantaged populations, such as dual language learners in early education, children of incarcerated individuals, children involved in both the child protection and criminal justice systems, and Native American youth. Overall, there was a focus on areas where the U.S. is spending a great deal on remediation (such as early emergency room visits) and on particular levers to overcome persistent obstacles to student success (such as parent engagement).

To help move the sector forward, the Department of Education announced three new competitions for feasibility study funding for early learning broadly, dual language learners in early education, and technical education. The department is also facilitating connections between existing evaluation and data system development efforts and teams designing SIBs. The focus on early childhood development by the Department of Education is reflective of the national field as a whole: Programming in the early years is becoming a particularly fast-growing sector for SIBs in the U.S. with over 40 SIBs feasibility and design stages.

SIBs for education in low- and middle-income countries

There is only one DIB for education in low- and middle-income countries; however, there are a number of SIBs and DIBs for education in design and prelaunch phases. In particular, the Western Cape Province of South Africa has committed outcome funding for three SIBs across a range of health and development outcomes for children ages 0 to 5.

Though the number of impact bonds may be relatively small, a significant amount of work has been done in the last 15 years in results-based financing for education. The U.K. Department for International Development (DfID), the Dutch Ministry of Foreign Affairs, the Asian Development Bank, the World Bank, the Global Partnership for Output-Based Aid, and Cordaid had together funded 24 results-based financing initiatives for education as of 2015. Of particular interest, DfID is funding results-based financing projects through a Girls Education Challenge and the World Bank launched a new trust fund for results-based financing in education in 2015. As with impact bonds in the U.S., a primary aim of results-based financing for education in low- and middle-income countries is to strengthen data and performance systems. Early childhood development programs and technical and vocational and training programs have also been identified as sub-sectors of high potential. Here are a few final takeaways for those working on results-based financing for education in low- and middle-income countries from the U.S. Department of Education conference:

1. The differences between the No Child Left Behind Act and the Every Student Succeeds Act should be analyzed carefully to ensure other data-driven education performance management systems promote both accountability and flexibility.
2. In building data systems through results-based financing, ensure services can be coordinated around the individual, feedback loops are available for providers, and data on early education, child welfare, parent engagement, and criminal justice involvement are also incorporated.
3. There are potential lessons to be learned from the U.S. Department of Education’s effort to conduct more low-cost randomized control trials in education and the U.S. Census Bureau’s data integration efforts.
4. SIBs provide an opportunity to work across agencies or levels of government in education, which could be particularly fruitful in both low- and middle-income countries and the U.S.

As the global appetite for results-based financing continues to grow and new social and development impact bonds are implemented throughout the world, we’ll have an opportunity to learn the true potential of such financing models.

President Obama’s speech at West Point, outlining the way forward on Afghanistan and Pakistan, was followed three days later by two important events underscoring the president’s view that “our security and leadership does not come solely from the strength of our arms.” He conveyed a new smart power view of security that “derives from our people [including] … Peace Corps volunteers who spread hope abroad, and from the men and women in uniform who are part of an unbroken line of sacrifice …”

On December 4, General Anthony Zinni, USMC (Ret.), former commander-in-chief of U.S. Central Command (CENTCOM), addressed an audience celebrating the tenth anniversary of the International Center for Religion and Diplomacy (ICRD). He pointedly noted that hard power alone cannot fight terrorism; economic and social factors of terrorist populations should be addressed. He further noted that empowering faith-based approaches “is a tremendous asset to inform the ways we mediate and find common ground … to figure out what the other side of smart power means.”

Recognizing that educational reform is critical, ICRD to date has empowered about 2,300 Pakistani madrassas administrators and teachers with enhanced pedagogical skills promoting critical thinking among students, along with conflict resolution through interfaith understanding. Evidence of success is mounting as the program fosters local ownership reasserting Islam’s fundamental teachings of peace and historical contributions to the sciences and institutions of higher learning—a rich history that was misappropriated by extremists who took over a significant number of madrassas using rote learning laced with messages of hate.

Earlier the same day, President Obama’s newly minted Peace Corps Director Aaron Williams, himself a former Dominican Republic Peace Corps volunteer, received high marks from former Senator Harris Wofford—a JFK-era architect of the Peace Corps—and hundreds of NGOs and volunteer leaders at the “International Volunteer Day Symposium.”

Director Williams has embraced a new “global service 2.0” style leadership committed to championing Peace Corps volunteers alongside a growing corps of NGO, faith-based, new social media and corporate service initiatives. Wofford, who co-chairs the Building Bridges Coalition team with former White House Freedom Corps Director John Bridgeland, spoke about the present moment as a time to “crack the atom of citizen people power through service.”

The notion of a “smart power surge” through accelerated deployment of people power through international service, interfaith engagement, and citizen diplomacy should be quickly marshaled at a heightened level to augment the commander-in-chief’s hard power projection strategies outlined at West Point. 

According to successive Terror Free Tomorrow polling, such strategies of service and humanitarian engagement by the United States have been achieving sustainable results in reducing support for terrorism following the tsunami and other disasters from Indonesia to Pakistan and Bangladesh. Lawmakers should take note of these findings, along with the evidence-based success of Johnston’s ICRD Madrassas project (which, inexplicably, has not received federal support to date, in spite of its evidence of marked success in giving Pakistani children and religious figures critical tools that are urgently need to be scaled up across the country to wage peace through enlightened madrassas education and interfaith tolerance).

A growing coalition of now over 400 national organizations is amassing a “Service World” platform for 2010. They have taken a page out of the incredibly successful Service Nation platform, which Barack Obama and John McCain both endorsed, creating a “quantum leap” in domestic service through fast track passage of the Kennedy Serve America Act signed into law by the president last spring. Organizers hope to repeat this quantum leap on the international level through a “Sargent Shriver Serve the World Act,” and through private-sector partnerships and administration initiatives adapting social innovation to empower service corps tackling issues like malaria, clean water, education and peace.  

With the ICRD Pakistan success, a rebounding Peace Corps and the Building Bridges Coalition’s rapid growth of cross-cultural solutions being evaluated by Washington University, the pathway to “the other side of smart power” through service, understanding and acceptance, is being vividly opened.

A Brookings Global Views paper further outlines how multilateral collaboration can be leveraged with other nations in this emerging “global force for good.” It is a good time to reflect on all this as we approach the upcoming 50th anniversary of the Peace Corps next year in Ann Arbor, where on October 14, 1960 President John F. Kennedy inspired students to mount a new global service.  

President Obama’s call to global engagement in Cairo in June, which ignited the announcement of Service World later that same morning, now demands a response from every citizen who dares to live up to JFK’s exhortation to “ask not what your country can do for you—ask what you can do for your country,” along with our young men and women preparing for engagement at West Point.  

Over 200 delegates from 50 countries gather this week in Washington for the Presidential Summit on Entrepreneurship. The summit hosts entrepreneurs to teach and learn innovative ways to strengthen professional and social relationships between the U.S. and the Islamic world. During his first major address to the Muslim world, delivered in Cairo last June, President Obama pledged to increase engagement through entrepreneurship, exchange programs and multilateral service initiatives.

Volunteer-led development initiatives have begun to act on Obama’s call for citizen diplomacy and private-sector engagement. The Initiative on International Volunteering and Service at Brookings and the Building Bridges Coalition have fueled an emerging legislative initiative that calls for increasing the role of international volunteers in the U.S. diplomatic agenda and development programs. This Service World Initiative has drawn from Brookings research outlining options to advance the president’s call for multilateral service.

As seen last year, for the first time in history, the majority of the world’s population lived in urban areas. And this trend is accelerating at an unprecedented rate. By 2050, urban dwellers are expected to make up about 70 percent of Earth’s total population. These informed 21st century urban citizens demand 24-7 connectivity, smart electric grids, efficient transportation networks, safe food and water, and transparent social services. All these demands place a huge strain on existing city infrastructures and the global environment. Most affected by this rapid urban boom, are the emerging markets. So how do we tackle this development dilemma?

One way is for highly-skilled experts, from a range of countries, to volunteer their time in emerging markets to help improve economic development, government services and stimulate job growth. This type of pro-bono program has many benefits. It benefits the urban areas in these emerging markets by leveraging intelligence, connecting systems and providing near-term impact on critical issues such as transportation, water, food safety, education and healthcare. It benefits the expert volunteers by fostering their teamwork skills, providing a cultural learning experience, and broadening their expertise in emerging markets.

IBM, which chairs the Building Bridges Coalition’s corporate sector, hosts a range of volunteer-led global entrepreneurship programs that improve economic stability for small- and medium-sized businesses, increase technology in emerging markets and open doors for the next generation of business and social leaders. This program connects high-talent employees with growing urban centers around the world and fosters the type of leadership to help IBM in the 21st century.

Recently, IBM sent a group of experts to Ho Chi Minh City as part of its Corporate Service Corps, a business version of the Peace Corps. This was the first Corporate Service Corps mission to be made up of executives, and the first to help a city in an emerging market analyze its challenges holistically and produce a plan to manage them. As a result, the city has now adopted a 10-year redevelopment plan that includes seven pilot programs in areas ranging from transportation to food safety. IBM will also help the city set up academic programs to prepare young Vietnamese to launch careers in technology services. IBM will continue this program throughout the next couple years to evolve the next set of global business and cultural hubs utilizing the volunteer hours of some of its most seasoned experts.

The Presidential Summit this week will further Obama’s call to “turn dialogue into interfaith service, so bridges between peoples lead to action.” The policy initiative of the Building Bridges Coalition, coupled with entrepreneurial innovations such as IBMs, can foster greater prosperity and service between the U.S. and our global partners.

2014 was a relatively friendless year for the Democratic Republic of Korea (DPRK or North Korea). It publicly lost its best friend and patron, China, to its erstwhile nemesis, the Republic of Korea (ROK or South Korea), when Presidents Park Geun-hye and Xi Jinping celebrated their growing friendship at the July summit in Seoul. Recently, retired PLA General Wang Hongguang wrote in the Chinese language site of Global Times, which is closely linked to the Chinese Communist Party, that China tired of cleaning up North Korea’s “mess” and would not step in to “save” North Korea if it collapses or starts a war.[1] And there is a vigorous debate in Beijing on whether the DPRK should be treated on a “normal” basis with China’s interests as the sole guide and purpose or be treated as a special case needing China’s indulgence and protection.[2] Since the Sony hack of November, North Korea has been under tighter scrutiny, both real and virtual, by Seoul, Beijing and Washington, accompanied by tighter sanctions in the new year. Bludgeoned by global condemnation of its atrocious human rights record, Pyongyang’s pariah status has intensified. Only Russia has been warming up to North Korea out of its own economic and political self-interest.

Is there any sizable country with good intentions for the region that is not giving up or beating up on North Korea? Is there any country Pyongyang likes and possibly even trusts? Mongolia stands out as the sole candidate, and it is friendly with both the East and the West.

Since the 2000s, Mongolia has played an increasingly constructive and steady role in in its bilateral ties with the DPRK and in its promotion of peace and cooperation in Northeast Asia. President Tsakhiagiin Elbegdorj, who visited Pyongyang in 2013, was the first head of state to reach out to the DPRK since Kim Jung Un assumed power and helped author the “Ulaanbaatar Dialogue on Northeast Asia Security,” which held its first meeting in June, 2014. It is a unique forum that combines official (track one) and unofficial academic/think tank/NGO (track two) participants, on a variety of important regional issues. The goals are to decrease distrust among nations and increase cooperation and peace. Both the DPRK and the ROK (Republic of Korea or South Korea) were represented at the inaugural meeting, as were the United States, China, Russia, Japan, and some European nations.

The UB Dialogue, as a consultative mechanism, has the potential to bring together policymakers, international organizations such as the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), and civil society entities and facilitate a range of initiatives related to economic cooperation; military transparency; environmental issues; non-traditional security threats; regional stability, cultural and educational exchange among the participants, including the two Koreas. These are official agenda items and goals of the UB Dialogue. With the Six-Party Talks nearly defunct and inter-Korean relations unable to address regional issues that affect the peninsula, Mongolia may be able to serve as a “Geneva or Helsinki of the East” as some observers have suggested.

Mongolia’s expanding global presence

Mongolia is uniquely positioned as the only country in Northeast Asia that enjoys good relations not only with North Korea but also South Korea, the United States, China, Russia, and Japan.

Mongolia’ relations with the United States, Canada, and Western Europe have steadily improved and deepened since the late 1980s. In recent decades, both Democratic and Republication administrations in Washington have enjoyed mutually warm and collaborative relations with Mongolia. President George W. Bush was the first sitting U.S. president to visit the country in 2005; he thanked the Mongolians for sending troops to join U.S.-led forces in Iraq and Afghanistan and for supporting anti-terrorism initiatives. Former Secretary of Defense Donald Rumsfeld also visited in the same year. In 2007, President Nambaryn Enkhbayar visited Washington to co-sign the Millennium Challenge Corporation Compact with President Bush. The next (and current) leader, President Elbegdorj, met U.S. President Barack Obama at the White House in 2011, as did the first civilian Minister of Defense, L. Bold. Vice President Joe Biden included Mongolia on a three-country Asia visit in August, 2011; China and Japan were the other two. A year later, Secretary of State Hilary Clinton took her turn in Ulaanbaatar. The most recent visit by top-level U.S. officials to Mongolia was by Secretary of Defense Chuck Hagel in April 2014.

Mongolia’s pursuit of the “third neighbor” policy allows the country to develop cooperative relations with the United States, Western Europe, ASEAN nations and others partly as “an air pocket” from its economic and security reliance on Beijing and Moscow. The softer side of this diplomatic push has been demonstrated by Ulaanbaatar’s membership in the Organization for Security and Cooperation in Europe and its previous chairmanship of the Community on Democracies.”[3]

Western experts on Mongolia applaud the way the country has developed a unique “peacekeeping niche” that facilitates participation in UN peacekeeping activities, international anti-terrorism measures, and humanitarian actions. For its small population of about three million, Mongolia takes on a heavy load of peacekeeping activities, ranking 26^th on the UN’s list of contributing nations.[4]

Since 2003, Mongolia annually hosts the “Khaan Quest” peacekeeping exercises for the purpose of tactical advancement and capacity building for its Mongolian Armed Forces (MAF) and for the improvement of regional confidence building. Although the United States and NATO play prominent roles, the Quest has attracted more diverse participants over the years so that by 2012, the number of interested parties expanded to include representatives from China and India as well as an array of developing nations such as Vietnam and Cambodia. These exercises are acknowledged as gatherings devoted to strengthening international cooperation and interoperability on peacekeeping initiatives around the world.[5]

On the economic side, Mongolia has been diversifying its external relations, with the maintenance of sovereignty and the related desire to reduce its overwhelming dependence on China as important goals. Expansion of economic relations is driven in part by a desire to participate in and benefit from global standards investment funds, and market access is a national priority. In that context, Mongolia’s relations with the West have been constructive and collaborative. For example, in 2013, the United States Trade Representative Michael Froman and Mongolia's Minister for Foreign Affairs, Luvsanvandan Bold, signed the Agreement on Transparency in Matters Related to International Trade and Investment between the United States of America and Mongolia. The Agreement commits the parties to provide opportunities for public comment on proposed laws and regulations and to publish final laws and regulations in Mongolian and English in order to facilitate access, openness, fairness, and procedural coherence in international trade and investment between Mongolia and other countries. “Additional commitments address the application of disciplines on bribery and corruption.” This type of administrative and legal modernization and the incorporation of measures to prevent and correct corruption are exemplary measures that could be helpful to the DPRK and other countries that are unfamiliar with or lagging in appropriate frameworks for doing business with diverse international actors.

Maintaining sovereignty between giants

China and Russia have vied for influence over Mongolia for many decades, from the time when Mongolia was in the Soviet sphere in influence to the present. Although 89 percent of foreign trade in 2013 was with China and Russia provides about 75 percent of Mongolia’s gasoline and diesel fuel and much of its electricity, Ulaanbaatar is assertively broadening and deepening its economic interests with the two big neighbors, especially greater transportation access and cheaper costs (vital to the landlocked nation), participation in the development of the New Silk Road corridor, and the construction of a Russian oil and gas pipeline through Mongolia that reaches China. All three countries have mutual interests and investments in developing Mongolia’s well-endowed mining industry.

But being sandwiched between two giants means Mongolia has to be prudent in preserving its sovereignty and independence, and Ulaanbaatar has done so in practical ways, balancing the two large powers’ interests with its own. The 2010 National Security Concept’s “One-Third Clause” sets a clear limit on the proportion of foreign direct investment from any one country: one-third. Legislation limits (foreign) state-owned companies from gaining control of strategic assets. And as numerous bilateral security and military cooperation agreements link Mongolia with China and Russia, UB has strategically and legally created elbow room for its autonomy. The government’s National Security and Foreign Policy Concepts outline a specific policy of not allowing foreign troops the use of its territory. Such preservationist measures to maintain sovereignty and independence in economic and security terms would be welcome examples to a North Korea which zealously prioritizes national sovereignty.

Mongolia and the Korean peninsula

Mongolia’s potential role as a non-nuclear peace broker in the region was further evidenced by its successful hosting of DPRK-Japan negotiations since 2012, which have yielded bilateral progress on longstanding abduction issues. In March 2014, Ulaanbaatar hosted the first-ever reunion between the parents of one of the abductees, Megumi Yokota (whom North Korea claims is dead), and her daughter, son-in-law, and their child who live in North Korea. Mongolia also served as a neutral venue for high-level talks on normalizing Japan-DPRK relations back in September 2007 as part of the Six-Party Talks framework. Asia Times reported that “arranging this recent meeting reflected Ulaanbaatar's ‘contribution to satisfy regional stability in Northeast Asia’ and how it could play a role in deepening understanding and normalizing DPRK-Japan relations.” President Elbegdorj's administration took particular care in staging the negotiations, including the use of the official state compound in Ikh Tenger as the meeting place. According to Alicia Campi, an American expert on Mongolia and the author of the AT article, Ikh Tenger was requested by the North Koreans.[6]

Mongolian President Elbegdorj is often described as an activist head of state, both for his focused efforts on developing Mongolia internally and advancing the country’s role and contributions internationally. One of his main foreign policy priorities is to promote regional economic integration and cooperation and peace and security. Dialogue and trust-building, two key components of his approach, coincide with ROK President Park Geun-hye’s emphasis on trustpolitik and the proposed Northeast Asia Peace and Cooperation Initiative (NAPCI). Both NAPCI and the UB Dialogue seek to chip away at distrust among Northeast Asian countries and increase collaboration and cooperation through multi-layered activities, including mutually reinforcing Track 1, 1.5 and 2 gatherings. Both emphasize multilateral cooperation on non-traditional security issues and people-to-people exchanges as ways to help build trust and resolve regional problems step by step. NAPCI held a track 1.5 forum in October 2014 in Seoul. In sharp contrast to its reaction to the first UB Dialogue of June that year, the DPRK flatly rejected the invitation to participate in the Seoul dialogue and criticized NAPCI as a cover for pressuring Pyongyang to relinquish its nuclear program and for reunification by absorption.[7]

There is no reason why the Ulaanbaatar Dialogue and NAPCI cannot be complementary and mutually reinforcing. Given that trust in inter-Korean relations is non-existent while Mongolia has gained deeper trust with both Koreas over the past two decades, NAPCI activities could benefit from Mongolia’s unique position in its relations with the DPRK. Ulaanbaatar potentially can serve as a neutral meeting ground, literally and metaphorically, for Pyongyang and Seoul. Moreover, given that the NAPCI seeks to maintain a cooperative relationship with other multilateral bodies and places emphasis on complementarity and inclusiveness, working with and supporting successful rounds of the UB Dialogues would be a principled move on the part of South Koreans. Moreover, engagement with North Korea through the UB Dialogue most likely represents an easier path to increasing inter-Korean trust than bilateral efforts and even easier than the NAPCI. South Korea’s domestic divisions and bitter left-right infighting tend to weaken the government’s position in approaches to the North. Seoul’s military standoff and competition with the North, its alliance with the United States, and participation in international sanctions regimes all cause suspicion in Pyongyang. In short, Seoul’s complex list of concerns and goals, some of which are contradictory to the spirit and practice of trust-building and cooperation with North Korea, create difficult conditions for progress through NAPCI alone.

In addition to lacking this baggage, Mongolia has unique standing with both North and South. It is a former Soviet satellite state that asserted full independence in 1990, and it is notable for successfully transitioning from a communist state to a vibrant democracy without civil war or bloodshed. President Elbegdorj’s 2013 speech in Pyongyang contained strong enunciation of the tenets of liberty. At the elite Kim Il Sung University in Pyongyang, he addressed students with these bold words: "No tyranny lasts forever. It is the desire of the people to live free that is the eternal power." And the Mongolian government has been keeping its border open to North Koreans who risk the arduous journey out of the DPRK and has permitted its airlines to transport them to South Korea.

Additionally, Mongolia has become a model of economic modernization and prosperous participation in the global economy. Although it faces some economic imbalances, its GDP rate was sky-high at 11.7 percent in 2013. There are good lessons to share with North Korea, and President Elberdorgj has made it clear that Mongolia would be very willing to work with the DPRK on economic development, IT, infrastructure, the management of mining precious earth resources and refineries. The two countries also engage in a worker exchange program, affording DPRK citizens the opportunity to breathe the air of freedom and to be exposed to South Korean television programming while they reside in Mongolia.

In recent years, Mongolia has pursued multiple types of people-to-people activities involving North Koreans, including academic exchanges, northeast Asian mayoral forums, and women’s parliamentary exchanges including female leaders from both Koreas. In June 2015, the second Track 2 conference of the UB Dialogue will convene in Ulaanbaatar with scholars from across the region and the United States with the theme of “Energy, Infrastructure, and Regional Connectivity.”

Sports and cultural initiatives in the past years have included international boxing matches in Ulaanbaatar with boxers from the DPRK, ROK, Mongolia, Russia and China. In 2013, Mongolia established an International Cooperation Fund which has supported children’s summer camps, basketball training and other exchanges with the DPRK in order to promote positive peace and people-to-people development in the region.

In the humanitarian arena, food aid to the DPRK has been channeled through international organizations, and the two countries have cooperated on physician exchanges. Prior research by Caprara and Ballen, conducted in cooperation with United Nations Special Envoy for Financing the Health Millennium Development Goals and for Malaria, has noted the additional soft power benefits of cooperative service development projects.

A recent global development forum hosted at the United Nations Asia-Pacific headquarters in Bangkok launched an Asia Pacific Peace Service Alliance which could build on these bilateral and regional exchanges in the critical area of humanitarian action and development in North Korea. An International Youth Leaders Assembly has been proposed in Ulaanbaatar for June, 2015, which would further the role of youth in fostering track two initiatives of service and dialogue.

Dr. Tsedendamba Batbayar, Mongolia’s Director of Policy Planning in the Ministry of Foreign Affairs and Trade, visited Washington in November, 2014 and noted the broad range of Mongolia-DPRK exchanges. Together with Mongolia Ambassador Bulgaa Altangerel, he emphasized his country’s desire to serve as a fair broker and mediator for the Northeast Asia region and to pursue prudent and practical measures to help build bridges of understanding between the people of North Korea and other parties.

But despite its uniquely constructive approach to dealing with the DPRK and other regional neighbors, Mongolia faces unique challenges in the mediator role it seeks to achieve. First, Ulaanbaatar has been able to gain Pyongyang’s trust because of the quiet diplomacy it has pursued, staying behind the scenes and out of the limelight. This has enabled a steady channel to the Pyongyang elite, and a focus on bilateral interests has been maintained. In short, drama has been avoided. But if Mongolia plays a more high-profile role with North Korea and multilateral actors, it will most likely be difficult to avoid some drama—posturing, rhetoric, and standoffs—emanating from various parties. Second, any increased or intensified involvement of China, Russia, and the United States in UB-led dialogue could come with the headache of big power arrogance and competition over leadership. The value of Mongolia’s role and activities for regional cooperation and peace stems from the fact that Ulaanbaatar does not assume airs or seek to dominate others. Whether China, Russia, and the United States would be able to refrain from seeking leadership and disproportionate influence in UB-led initiatives is highly questionable. Third, with respect to peninsular issues, for the UB Dialogues to gain more acceptance and credibility regionally and internationally requires that the DPRK become a consistent and collaborative presence at gatherings. Whether any nation or actor has the capacity to deliver consistent and collaborative participation by Pyongyang is an open question.

In addition, some observers believe that the impasse between North Korea and other nations is not simply the result of a trust deficit, but reflects mutually exclusive goals. While Mongolian mediation may not be able to solve the nuclear issue, it can be an effective channel – among others – for increasing communication, finding common ground, and beginning to ease tension.

Mongolia is the one Northeast Asian country that has kept its emotional cool and balanced policy interests with North Korea and other regional actors. It has not tripped over its own feet by politicizing historical grievances with its neighbors. Rather, it has exercised a calm can-do approach while its neighbors have engulfed themselves in hyper-nationalistic and ideological mire. And it has smartly used diplomacy and entrepreneurship to make friends and develop its own economy and people. These are significant assets that can be of benefit not only to UB but also to the region.

Recommendations

1. The Obama administration should actively support the Ulaanbaatar Dialogue process and encourage Seoul to find common cause in advancing greater regional dialogue and collaboration with the Mongolians through Track 2 and 1.5 processes. A precedent for this can be found in the case of Oman, which the current administration effectively tapped for back channel dialogue with Iran, kick-starting the present nuclear talks. Also, support by Washington would build on a prior exchange with Mongolia hosted by the Korea Institute for National Unification (KINU), where scholars noted potential benefits from three-way economic cooperation and the possibility of providing the North Koreans with a proven model of transformation from a closed statist system to a prosperous and more open system.

2. ROK President Park’s proposed regional cooperation mechanism should receive serious attention together with the Ulaanbaatar initiative. The two parallel efforts could benefit from being part of inter-connected strategies to defuse regional tension and forge greater trustpolitik.

3. The UN ESCAP headquarters can serve as an important multilateral bridge for humanitarian aid together with the multi-stakeholder Asia Pacific Peace Service Alliance (APPSA), which was launched at the UN headquarters in Bangkok last October. The U.S. Agency for International Development (USAID) could partner with UN ESCAP and the World Food Program to establish a verifiable humanitarian aid regime, building on prior food aid oversight protocols developed during the Bush administration. Mongolia also would be an excellent candidate for the training of an international volunteer corps for potential disaster and humanitarian relief and economic development projects concerning the DPRK and the broader Northeast Asia region. Mongolia has excellent working relations with the U.S. Peace Corps, which also helped facilitate the recent launch of the APPSA.

4. In the context of peninsula unification planning, regional economic cooperation on private and multi-stakeholder investment projects and the enabling of market-friendly policies could be further explored with Mongolia and other Northeast Asian partners in areas such as infrastructure, energy, and technology.5. Cultural and educational exchanges between Mongolia and the DPRK could be expanded on a multilateral basis over time to include the ROK, China, Russia, Japan and ASEAN nations together with UNESCO to further cultural bases and norms of peace.